Home loan questions, answered

Nothing, in almost every case. Brokers are paid a commission by the lender that funds your loan, and that commission is disclosed to you in writing before you apply. The rate you're offered is not increased to pay for it — lenders price broker-originated loans the same as their direct channel.

A bank can only offer you its own products and its own credit policy. A broker compares many lenders at once, which matters most when your situation is anything other than plain vanilla — self-employed income, casual or overtime earnings, a low deposit, or a credit blemish. If your file is simple and your bank is already sharp, going direct is fine.

How we work

Work out your borrowing power and your true upfront cash requirement before you look at property. Those two numbers set your budget; everything else follows. Then get a pre-approval so you can act when the right property appears.

Check your borrowing power

Conditional (pre-)approval typically takes 1–5 business days. Formal approval after you've found a property usually lands in 5–15 business days, depending on the lender's assessment queue and how quickly the valuation comes back. A complete application at submission is the single biggest driver of speed.

Full approval timeline

Yes. Every application is recorded as an enquiry on your credit file for five years, and a cluster of enquiries reads as either shopping around desperately or being declined repeatedly. Compare first, apply once — that's the main reason to use a broker rather than applying to three banks yourself.

How credit scores work

Photo ID; your last two payslips and most recent PAYG summary or two years of tax returns and financials if self-employed; three to six months of transaction, savings and credit card statements; and evidence of your deposit and its source. Anything unusual in those statements is worth explaining upfront rather than being asked about.

As a very rough guide, lenders land somewhere between four and six times gross household income, but that range is wide because the real driver is surplus income after an assessed rate buffer of about 3% above the actual rate, your living expenses (floored at a benchmark), and every debt and credit limit you hold.

Borrowing power by income

20% of the purchase price avoids Lenders Mortgage Insurance entirely. You can buy with 5% through the First Home Guarantee if you qualify, or from 5–10% with LMI otherwise. Remember the deposit isn't the whole cash requirement — stamp duty, legals and inspections sit on top.

Work out your total cash needed

Yes, meaningfully. Lenders treat your compulsory repayment as a committed monthly expense, which at higher incomes can reduce borrowing power by roughly $50,000–$100,000. Paying out a small remaining balance before you apply sometimes buys back more borrowing power than it costs.

HECS debt and home loans

Yes. Lenders assess the limit, not the balance, at roughly 3.8% of the limit per month. A $20,000 card you never use can cost you around $80,000–$100,000 of borrowing capacity. Reducing or closing unused limits before applying is one of the cheapest wins available.

Improve your borrowing power

Often yes. A family member offers equity in their property as additional security, which can remove LMI and let you borrow up to 100% of the purchase price plus costs. The guarantee is a real legal liability for them, but it's limited to a set amount and can be released once your LVR falls far enough.

Guarantor home loans explained

Usually at 80%, and usually only with a two-year history — but some lenders count 100% of overtime for essential-services occupations such as nursing, policing and paramedics. The difference between those two policies on the same payslips is often more than $100,000 of borrowing power.

Annualise your income

It depends on your LVR, loan purpose and income type far more than on the lender's advertised headline. We publish indicative current ranges by borrower type and update them monthly, alongside the RBA cash rate.

Current home loan rates

The Reserve Bank sets the cash rate target eight times a year, and variable home loan rates generally follow within a few weeks — though lenders decide how much to pass on. Our tracker shows the current rate and every recent decision.

RBA cash rate tracker

When the annual saving comfortably exceeds the switching costs, and you'll hold the loan long enough to bank it. Discharge, registration and any new lender fees usually total $500–$1,500; a 0.50% saving on a $600,000 loan is around $3,000 a year, so the payback is typically a few months.

Refinance savings calculator

Typically $500–$1,500 all in: a discharge fee from your current lender ($150–$400), state mortgage registration and de-registration fees, and sometimes an application or valuation fee at the new lender. Break costs apply if you're leaving a fixed rate, and LMI is payable again if you're above 80% LVR.

Full cost breakdown

Fix for repayment certainty, not to beat the market — fixed rates already price in what the market expects. Stay variable if you value an offset account, unlimited extra repayments, or the freedom to refinance without break costs. Splitting the loan is a legitimate middle path.

Fixed vs variable compared

Yes. If your property has grown in value, you can increase your loan against the new valuation — generally to 80% LVR without LMI — and take the difference as cash for renovations, landscaping or a deposit on another property. Lenders will ask what the funds are for.

Cash-out refinancing

Lenders Mortgage Insurance protects the lender — not you — if you default and the sale doesn't cover the debt. You pay it, as a one-off premium usually capitalised into the loan, whenever you borrow more than 80% of the property's value. On a $700,000 purchase at 90% LVR it's commonly $12,000–$20,000.

LMI guide

It varies by state and is the largest single upfront cost after the deposit. First home buyers receive exemptions or concessions in every state, with thresholds that change regularly — worth calculating for your exact price rather than estimating.

Stamp duty calculator

Money in the offset is subtracted from your loan balance before interest is calculated. Your repayment stays the same, so a larger share of it goes to principal each month — which is why the loan is paid off years earlier, not just cheaper each month.

Offset calculator

Almost always, because offset savings are effectively tax-free while savings interest is taxable. At a 6% loan rate and a 32.5% marginal tax bracket plus Medicare levy, a savings account needs roughly 9.2% to match an offset — a rate that doesn't exist.

Offset vs savings calculator

Both reduce interest. An offset is a separate transaction account you can access freely; redraw is money you've already paid into the loan and are pulling back out. Redraw can be restricted or withdrawn by the lender, and for investors, redrawing can taint the tax deductibility of the loan.

Offset vs redraw

Conveyancing ($1,000–$2,500), building and pest inspection ($400–$800), council and water rate adjustments at settlement, loan application or valuation fees, and moving costs. Budget $3,000–$5,000 beyond deposit and stamp duty.

Total purchase cost calculator

There's no published minimum. Major banks are generally comfortable above roughly 650 and cautious below 550, but the score is only a filter — the underlying conduct on your file matters more. Non-bank and specialist lenders assess conduct without a score cut-off at all.

Credit scores explained

Yes. Specialist and non-bank lenders lend against defaults, arrears, and in some cases discharged bankruptcy, pricing for the risk instead of declining. Expect a higher rate and often a lower maximum LVR, with the plan being to refinance back to a prime lender in 12–24 months.

Lenders that accept bad credit

They can, and sometimes do — a strong deposit, long employment and a clear explanation for a one-off event carry weight. But major-bank systems auto-decline below internal thresholds before a human reads the story, which is why the same file often succeeds with a lender that assesses conduct manually.

Low scores and bank policy

Yes. Lenders see them on your statements and increasingly on your credit file, and regular BNPL use reads as cash-flow strain regardless of whether you've ever missed a payment. Closing the accounts three to six months before applying is the cleanest fix.

Five years from the date they're listed, and seven for a serious credit infringement — paying it out doesn't remove it, it just marks it as paid. Repayment history information stays for two years, which is why recent conduct matters more than an old default.

Why credit scores matter

Yes, through the First Home Guarantee, where the government guarantees the portion of your loan above 80% so no LMI is payable. Price caps apply by location and you must meet the eligibility criteria, but the saving versus paying LMI is typically $15,000–$25,000.

5% deposit scheme

It depends on your state and whether you're buying new or established: a First Home Owner Grant for new builds in most states, stamp duty exemptions or concessions under state thresholds, and the federal First Home Guarantee for the deposit itself. They stack.

First home buyer guide

It depends on whether prices in your target market are moving faster than you can save. Waiting a year to save another 5% is a loss if the median rises 6% in that year, and a win if it doesn't. Model both — don't decide on sentiment.

Rent vs buy calculator

Usually three months, sometimes six, and it can be extended with updated payslips. It's conditional — a valuation and final assessment still apply once you find a property — so treat it as a strong indication rather than a guarantee.

Pre-approval explained

Two years of tax returns is the standard requirement, but several lenders accept one full year of returns, and alt-doc lenders will assess on BAS statements, an accountant's declaration or six to twelve months of business bank statements.

Best lenders for self-employed

Expenses in your financials that reduce taxable profit but aren't real cash costs to you — depreciation, one-off expenses, additional superannuation, interest on debts being refinanced, and your own director's wages. Lenders add them back to assessable income, and how generously they do it varies enormously.

Self-employed lending

Typically 70–80% of gross rent, shaded to allow for vacancy, management fees and maintenance. A few lenders go to 90% for strong applicants. This shading is the main reason investors hit a borrowing wall earlier than they expect.

Investment cashflow calculator

Yes — this is how most portfolios are built. You release equity up to 80% LVR against your existing property and use it as the deposit and costs on the next one, keeping the loans separate so the investment interest stays cleanly deductible.

Equity calculator

Formal (unconditional) approval is followed by the lender issuing loan documents for you to sign and return, a certification and settlement booking with your conveyancer, then settlement itself — typically 30 to 90 days after contract date, depending on what you agreed. Between approval and settlement you should avoid new debt, changing jobs, or spending your deposit, because lenders can and do re-verify before funding.

The full 8-step process

Conditional (pre-)approval means the lender has assessed your income, expenses and credit and is willing to lend subject to conditions — usually a satisfactory property valuation. Unconditional (formal) approval means every condition is met and the lender is committed. Only unconditional approval is safe to rely on when signing an unconditional contract.

Pre-approval explained

Yes. Approval is conditional on your circumstances staying the same. New debt, a lower-than-expected valuation, a job change or probation, a missed repayment, or a large unexplained transaction can all trigger a re-assessment. Tell your broker before you do any of those things, not after.

The lender values the property to confirm its security is worth what you're paying. If the valuation is below the contract price, the lender lends against the lower figure — so you either contribute more cash, accept a higher LVR and LMI, or challenge the valuation with comparable sales. On an established purchase a low valuation is uncommon; off-the-plan is where it bites.

LVR calculator

Usually 10% of the purchase price, though many vendors accept 5% by negotiation and some accept a deposit bond. It's paid to the agent's trust account or the vendor's conveyancer and forms part of your total deposit — it isn't an extra cost.

Total cash needed

It lets you exit the contract, usually with the deposit returned, if your lender doesn't formally approve the loan by an agreed date. Always ask for one on a private-sale purchase unless you already hold unconditional approval. At auction there is no finance clause — the contract is unconditional on the fall of the hammer.

Responsible lending obligations require them to verify you can afford repayments without substantial hardship. They compare your declared expenses against your statements and against a benchmark (HEM), and use the higher figure. Understating expenses doesn't help — it gets picked up in the statements and slows the file down.

Borrowing power calculator

Yes, and sometimes you should — for example if the valuation disappoints or the assessment queue blows out past your finance date. It means a fresh application and a second credit enquiry, so it's a considered move rather than a casual one.

Principal and interest repayments reduce the debt every month. Interest-only repayments cover interest alone, so the balance doesn't fall — repayments are lower now but the loan costs more overall, and repayments step up when the IO term ends. Owner-occupiers are almost always better off on P&I; investors sometimes choose IO for cash flow and deductibility reasons.

Repayment calculator

Take the longer term for the lower required repayment, then pay extra voluntarily. That gives you the same payoff speed as a shorter term with a safety valve if your income drops. A shorter term locks in a higher minimum with no upside.

Extra repayments calculator

Fortnightly helps if you pay half the monthly amount every fortnight, because 26 half-payments equal 13 monthly payments a year instead of 12 — roughly four years off a 30-year loan. Simply splitting the monthly figure across four weekly payments changes nothing.

Model extra repayments

Part of your balance is fixed and part is variable. You get repayment certainty on the fixed portion while keeping offset access and unlimited extra repayments on the variable portion. It's the sensible answer when you genuinely can't decide.

Fixed vs variable

Usually yes if you hold meaningful savings. A $395 annual package fee is repaid by around $6,600 sitting in an offset at a 6% rate — and packages typically bundle a rate discount, fee-free credit card and free valuations. If you keep almost nothing in cash, a no-frills basic loan is cheaper.

Offset calculator

Sometimes — it's called substitution of security or loan portability, and it swaps the property securing the loan without discharging and re-applying. It's most valuable when you're mid fixed term and want to avoid break costs, but the lender still assesses the new property and any change in loan amount.

The loan reverts to the lender's variable rate, which is usually well above what they'd offer a new customer — the classic loyalty tax. Diarise the expiry three months out and either negotiate a repricing or refinance. Doing nothing is the single most expensive habit in Australian home lending.

When your fixed rate ends

Most lenders offer a repayment holiday, a switch to interest-only, or a hardship arrangement — but interest keeps accruing and the balance grows. Hardship arrangements are a legal right when you're genuinely struggling, and requesting one early is far better for your file than missing payments.

In order of impact: get the rate down (it's free and repeats every month), direct your entire salary and savings through an offset, keep the repayment unchanged when rates fall, and add whatever surplus you can as extra repayments early in the loan when the interest saving compounds longest.

See the years you'd save

Paying down the loan is a risk-free, tax-free return equal to your loan rate. To beat 6% after tax on a 32.5% marginal rate plus Medicare, an investment needs roughly 9% before tax with real risk attached. Many people do both — offset first for the emergency buffer, then invest the surplus.

Offset vs savings maths

Only if you need the cash flow. Keeping the old repayment when the required amount falls converts the whole cut into extra principal, which is the least painful way to shorten the loan — you never had the money in your budget in the first place.

RBA cash rate tracker

Far more than the same lump sum late. $20,000 paid into a $600,000 loan at 6% in year one saves substantially more interest than the same $20,000 in year 20, because it stops interest accruing on that amount for 29 more years.

Model a lump sum

Annually, and always three months before a fixed term expires. Rates, your LVR and your income all move; a loan that was competitive when you took it can drift 0.5% or more behind the market within two years without anything visibly changing.

Current rates

Yes. Non-bank lenders are licensed credit providers regulated by ASIC and bound by the same responsible-lending and hardship obligations; they fund through wholesale and securitisation markets rather than deposits. What differs is credit policy and pricing, not your legal protection or the title to your property.

Compare lenders

Banks score you, then assess: an automated credit score gate can decline before a human reads your file. Many non-banks assess credit conduct directly — whether your repayments were actually made — with no score cut-off. Same payslips, same statements, very different outcome.

Credit scoring vs conduct

There is no single best lender — only the best fit for your income type, LVR, credit history and the features you'll use. A self-employed applicant with one year of returns, a nurse with heavy overtime, and a 95% LVR first buyer each have a different right answer, and it changes as policies change.

Lender comparisons

Often the same or better. Lenders publish pricing tiers to brokers and allow case-by-case discount requests, and a broker with volume across many lenders knows which one is currently sharp for your LVR. What a broker can't do is invent a rate the lender won't fund.

Indicative rate ranges

We compare a wide panel spanning major banks, second-tier banks, mutuals, non-banks and specialist lenders, and we tell you which ones we shortlisted and why. You'll see the comparison, not just the recommendation.

How we work

Yes — unconditional approval, not pre-approval, because an auction contract has no cooling-off period and no finance clause. Losing your 10% deposit because finance fell through is a genuine and avoidable risk.

Almost always. $400–$800 to find structural movement, termite activity, unapproved works or a failing roof is trivial against the repair bill, and the report is real negotiating leverage even when nothing serious appears.

Budget the upfront costs

They review the contract and vendor disclosure statement, conduct title and planning searches, calculate rate and land tax adjustments, and manage settlement. Expect $1,000–$2,500 plus search fees, and engage them before you sign anything.

Yes, in one specific way: your lender values the property at completion, sometimes two years after you signed. If the market or the building's comparable sales move against you, the valuation can land below your contract price and you'll need to fund the gap. Lenders also rarely hold approval that long, so a fresh assessment is normal.

Typically 30, 60 or 90 days by negotiation. Ask for enough time to get formal approval comfortably — 30 days is tight if your income needs manual assessment, and delayed settlement can attract penalty interest.

Process timeline

It depends on how long you'll stay, the gap between rent and total ownership cost, and price growth in your target market. Buying costs 5–6% in transaction costs on the way in, so short holds rarely pay — but a decade of ownership usually does.

Rent vs buy calculator